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Does leasing a car affect your debt-to-income ratio?
I’m no accountant but I’m trying to see if taking on a vehicle lease is a good financial decision for me. Will it impact my debt-to-income ratio?
Drew Waterstreet · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
Everyone’s finances are different but the simple answer is yes. By leasing a vehicle, you take on more debt through the lease’s financing plan. This affects your debt-to-income ratio—but that’s not necessarily a bad thing!
By definition, your debt-to-income (DTI) ratio is your monthly debt payments divided by your gross monthly income. A standard and safe DTI is 28% and a DTI of over 40% is considered financially unstable.
Knowing what you can afford is important. Taking on a car lease naturally adds to your total debt, so it’s important to analyze how much it affects your DTI.
While you keep an eye on your debt-to-income ratio,
Jerry
can keep an eye on cheap car insurance
rates. It takes less than a minute to sign up and compare rates and the average Jerry user saves $887 a year.View full answer
- Gregory R.
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